Recent reports have highlighted London’s vastly different economic climate to the rest of the UK. Government analysis shows that business rates have risen and will continue do so, resulting in local businesses in the capital being affected more so than the rest of the country. This includes shops, bars, restaurants as well as small to medium enterprises.
Since 2008 London rents have risen exponentially. As of the year 2013, London’s Silicon Roundabout attracted 15,000 new companies around the Shoreditch area. For the rest of the UK, the scenario is different, with rents falling or stagnating because of the lack of demand.*
In correlation, property service firm JLL conducted an analysis that shows business rates on office space is likely to increase dramatically in most areas, further illustrating that good transport links and an array of office space is the reason for such an increase in popularity. Other business sectors have felt change. Local Shoreditch business, The Comedy Cafe, was forced to shut down due to an inability to pay the near-doubling rent cost which went from £120,000 to £230,000 a year.
The Comedy Cafe owner stated:
“Shoreditch became an area for artists and rents went up. Then the IT crowd came in and rents skyrocketed.”, which further emphasises the increase in business and workers coming into the city affecting London’s economy dramatically. For these companies, asset finance and leasing could be beneficial.
Flexioffices states as of 2016, Shoreditch accounts for 3.14% of SMEs in London, and Figure 1 shows the projected rates up to 2017/2018 for offices:
The table highlights a 142% monthly increase in Shoreditch. Going from £12 per sq ft to £239 per sq ft.
As for the rest of the UK, Figure 2 gives us comparable insight.
What’s evident is that cities that are within close proximity to London garner the highest rate increase, for example, Cambridge and Reading. Other rate increases are marginal and will fall in prominent cities such as Birmingham and Leeds.
Overall, the data emphasises the comparable economic rates of London to the rest of the UK. Shoreditch highlights London’s economic difference to other places in the UK, displaying an increase in business rates that affect SMEs, which has unfortunately led to some local businesses closing.
*Ref: UK Business Insider
This post originally appeared on LinkedIn.
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